Bank of America Agrees to $1.2 Billion Penalties Over AML Failures

What changed

Bank of America has agreed to pay $1.2 billion in penalties after US authorities said it failed to report more than $5 billion in suspicious activity, including $1 billion linked to national-security or illicit-finance risks.

The settlement includes:

• A record $750 million penalty from the Office of the Comptroller of the Currency.
• An $11.6 million settlement with the Office of Foreign Assets Control over 475 apparent sanctions violations involving Russia, Iran, narcotics and global terrorism.
• A non-tax-deductible charge expected to cut the bank’s third-quarter net income by about 17 cents per share.

Why it matters

This was not simply a failure to catch a few questionable payments. Authorities said Bank of America relied too heavily on law enforcement and other banks to alert it, effectively leaving part of its own detection duty to outsiders.

That matters because the bank’s systems sit inside the machinery used to move money across borders. The alleged gaps included transactions possibly connected to Chinese money-laundering networks and trade-based laundering tied to the southwest border. When a bank this large misses those signals, regulators see more than a compliance problem: they see an opening through which illicit money can travel.

Bank of America said it is committed to completing the work required by regulators and has already devoted substantial staff and resources to remediation. The financial hit is immediate; the longer-term test is whether the bank can show that its controls, rather than outside warnings, are finding suspicious activity early enough.